2024-10-03 20:30:52
C point of view｜The rise in the stock market will help the retail industry pick up
After the epidemic ended, Hong Kong quickly cleared customs with the mainland. The retail industry thought that business would soon return to pre-epidemic levels, so it made many expansionary arrangements in the hope of recovering losses during the epidemic. Unfortunately, the development of the situation was not as ideal as expected. The reason is that with the end of the epidemic, China’s real estate has also begun to explode, and real estate-related industries have also entered difficulties. The mainland’s economic downward pressure is severe, and ordinary people are afraid to spend too much.
Under such circumstances, although the number of mainland tourists visiting Hong Kong has increased due to the end of the epidemic, their spending power is not as good as before. As a result, the retail industry faced many operating difficulties, and many of them had to close down. The environment in Jipu has caused social sentiment to become depressed, and both the stock market and the property market lack new capital inflows. Hong Kong then fell into the threat of deflation.
Fortunately, the Federal Reserve restarted the interest rate cutting cycle on September 18, so the market can finally breathe a sigh of relief. The fall in U.S. interest rates has provided China with a lot of room for monetary easing to rescue the market. As a result, the downturn in the mainland stock market has been completely reversed, and Hong Kong stocks have also gotten a share of the pie. In just ten days, the stock markets in China and Hong Kong have accumulated an increase of more than 20% to 30%, and the social atmosphere has also become optimistic.
The asset value generated by such a large increase is worth tens of trillions of dollars, and part of the wealth effect generated will flow into the consumer market. When people feel that they are richer than before, they will naturally behave more generously when spending, which will benefit the retail industry.
This situation has begun to show up during the National Day Golden Week. The number of people traveling during the holiday has further increased compared with last year, and business has also increased by about 10%. According to estimates by retail industry insiders, the situation will improve further in the future. This is because U.S. interest rates are likely to continue to adjust downward in the next two years, putting pressure on the exchange rate of the U.S. dollar. Since the Hong Kong dollar must maintain a linked exchange rate with the U.S. dollar, the Hong Kong dollar exchange rate cannot help but fall simultaneously with the U.S. dollar exchange rate. After the exchange rate of the Hong Kong dollar falls, foreign tourists will feel that Hong Kong’s goods are cheaper than before, and they will be more willing to spend money in Hong Kong than before. This situation continues to have a positive impact on Hong Kong’s retail industry.
On the other hand, when the exchange rate of the Hong Kong dollar falls, the cost of overseas travel for Hong Kong people will increase. When shopping overseas, everything will feel more expensive than before. This situation will curb Hong Kong people’s desire to spend in other places, and they will be more willing to stay in Hong Kong and spend more.
If the active funds in the stock market are smart money, some retail-related stocks have been favored by these smart money recently, such as Meituan, Alibaba, Link REIT, Wharf Real Estate, etc., and they have all recorded impressive gains. . Investors should invest in such stocks because they feel that the operating conditions of the retail industry are improving and the prospects are good.
The reality is that after a series of eliminations in Hong Kong’s retail industry, only a group of companies with relatively strong competitiveness have survived. Now that they have fewer competitors, rents have flattened, and profitability conditions should be improved compared to before. Therefore, the worst moment for Hong Kong’s retail industry should be over, and it is believed that the operating conditions in the fourth quarter will improve compared to the third quarter.
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